TV losing ads to online, Duncan says

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LONDON -- Advertising revenues are permanently shifting from television to online, according to Channel 4 chief executive Andy Duncan. He sounded the warning Monday as the broadcaster announced a major slump in net profits for 2006.

Announcing a preliminary trading update for 2006, Channel 4 said that "static revenues and increased costs" resulted in net profits of £20 million ($39.3 million) in 2006, according to initial internal audits, compared with £48.5 million the previous year.

He warned that advertising revenues were forecast to fall even further this year and said the drop was "not a blip, but illustrates the structural shift of money away from television toward online."

The core network saw advertising revenues down 7% at £651 million ($1.3 billion) despite marginally increasing its share of viewers -- from 9.7% in 2005 to 9.8% in 2006.

Channel 4's digital channels -- E4, More4 and the FilmFour movie channels -- increased their combined advertising revenues by more than 80%, up from £60 million in 2005, which meant the whole group's revenues were essentially flat.

The broadcaster will impose a program spending freeze in the face of a possible slide into the red in 2008-09.

Duncan is expected to underline the case for structured financial support for the broadcaster when he addresses the Oxford Media Convention next week.